State OKs affiliation between St. E's, Faxton St. Luke's

The state has approved the proposed affiliation between Faxton St. Luke's Healthcare and St. Elizabeth Medical Center.

St. Elizabeth Medical Center and Faxton St. Luke’s Healthcare have received some glad tidings that moved them a big step closer to forming an affiliation.

The New York State Public Health and Health Planning Council approved the affiliation at its meeting Thursday. That came a day after the state attorney general announced that his office has reached a settlement with the hospitals. His staff reviewed the affiliation to determine whether it would cut down on local competition and drive up health care costs.

All this means that the affiliation can move forward unless the Federal Trade Commission chooses to challenge it in court on antitrust grounds. The FTC also could decide to negotiate a settlement, as the attorney general did.

Hospital officials have met with federal representatives but have not yet filed the paperwork for Department of Justice review.

“If they have no objections, we will be able to move forward with the affiliation as early as the spring of 2014,” said Faxton St. Luke’s President/CEO Scott Perra in a news release.

“This is a positive move for our community,” said Richard Ketcham, president/CEO of St. Elizabeth in the same release. “While there is still much work to do going forward, the affiliation provides a strong foundation to better respond to the health care needs of our community.”

Neither Ketcham nor Perra was available for comment Friday.

The hospitals are trying to affiliate under a parent corporation called the Mohawk Valley Health System. The arrangement would allow St. Elizabeth to remain Catholic and Faxton St. Luke’s secular and free to offer reproductive health services not allowed in Catholic hospitals.

An affiliation would create an organization with nearly 4,500 employees and a combined operating budget of more than $500 million.

The health system would be overseen by an 18-member board of directors made up equally of representatives from each hospital. Perra would serve as CEO and Ketcham would retire.

Hospital officials have cited financial pressures from falling reimbursements and increasing regulations as the reason for why the affiliation is needed.

Mergers and affiliations have become common among hospitals in the state. Rome Memorial Hospital and Bassett Medical Center in Cooperstown recently announced that they are exploring an affiliation. The driving force behind that affiliation, though, is changing insurance models and the need for more primary care in the Rome area.

Rome Memorial would retain its board, its CEO and control over its finances and employees.